Companies across St Helens and the North West are still losing out on millions of pounds of research and development tax savings every year compared to their counterparts across the rest of the UK, according to R&D tax relief specialist Jumpstart.
Despite an increase of 19 per cent year on year in the total R&D tax credits claimed in 2015-2016, analysis of the latest HMRC figures for full year ending 2016 shows that North West companies accounted for just 10% of total claims and a mere 6% of the total tax benefits claimed.
Russell McGrath, Business Development Manager for Jumpstart in the North West, commented: “These latest HMRC figures are an alarming demonstration of just how much North West companies are losing out in terms of tax savings compared to companies across the rest of the UK. Of the 26,255 claims across the UK totalling £2.9billion in tax benefits, only 2,665 claims came from companies in the North West and resulted in just £160million back.”
Of the 2,665 North West claims, 2,290 were claimed under the SME R&D scheme and the remainder were claimed under schemes for large companies.
London and the South East made the highest number of claims in the year. London companies accounted for 19 per cent of all claims and 29 per cent of the total tax relief claimed, and the South East accounted for 17 per cent of claims and 20 per cent of the total claimed.
The figures show a concentration of claims in the ‘Manufacturing’ [28% of claims and 32% of total claimed]; ‘Professional, Scientific & Technical’ [20% of claims and 23% of total claimed]; and ‘Information & Communication’ [26% of claims and 20% of total claimed] sectors across the UK.
Mr McGrath continued: “Whilst uptake of the UK government’s R&D tax relief scheme is increasing across the UK as a whole and is very healthy in certain regions, I don’t feel companies in the North West are reaping the full benefits of the scheme.
“Also, local companies could be under claiming or over claiming because their technical project activities and expenditures are not being accurately interpreted against government legislation. As well as the introduction of increased scrutiny over claims by HMRC, the process of claiming is very much a technical assessment, so it is important that companies instruct a specialist advisor to handle this for them.
“There is huge scope for a much more focused uptake by companies in the North West. I would urge firms here to get in touch with Jumpstart or their advisors to find out more about how they can make significant tax savings through R&D tax credits if they are making a profit or get a cash credit if they are loss making.”
Since its inception, Jumpstart has helped its clients recover over £95million in R&D tax relief and has identified over £482million in eligible R&D expenditure.